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The Big Donation Distribution Problem You Don’t Know About

At Groundswell, we are passionate about challenging the status quo, and one industry standard that we’ve set our sights on is the unconscionable donation distribution delays normalized by legacy platforms like Benevity, Cybergrants, and YourCause. These companies, which currently service the majority of Fortune 500 companies, routinely take 30-60 days to send a donor’s donation to charity, and 90-180 days to send a company’s matching gift.

We believe that this is wrong. So we’ve fixed it.

Groundswell is the fastest employee giving platform, sending both the employee's donation and the company's match together within 5 days.

Why do distribution timelines matter?

In this blog post I’m going to share with you why this is so powerful. But first, let me tell you why this is personal.

From 2010 through 2020 I served as the founder and CEO of the global humanitarian relief organization Team Rubicon (TR). TR responds to hundreds of disasters and crises each year, each mission carefully planned. One critical planning factor is fundraising - how much will the organization be able to successfully raise in the immediate onset of this event? The first 96 hours of an event are the most telling, as individual donations begin pouring in and corporations begin calling to make pledges. Using these early signals, a budget is prepared and a mission is launched.

Now fast-forward four months. A literal mountain of paper checks begin arriving, representing the matching donations that have finally been invoiced, collected, aggregated, and distributed to us by Benevity, Cybergrants, and YourCause. However, more often than not the mission was already over - and the money now unable to be spent effectively.

Don’t get me wrong - a nonprofit is never going to complain about donations coming in. But having not known that these checks were coming, they were not included in the original budgeting. This created massive headaches for our staff, but more importantly, represented a missed opportunity to have delivered more impact during the response phase.

When I started Groundswell, this was one very real problem that I set out to solve.

Why does it take so long for legacy platforms to distribute donations?

There are several things that lead to these distribution delays, the primary of which is these platform’s process of distributing donations in aggregated batches. That process looks like this:

  1. Employee 1 makes a $10 donation to a Charity X on September 1st, Employee 2 makes a $15 donation to Charity X on September 10th, and Employee 3 makes a $25 donation to Charity X on September 30th.
  2. In October, the legacy platform combines all donations designated for Charity X in September into a single amount - in this instance $50 ($10 + $15 + $25)
  3. On or around October 15th, $50 is sent to Charity X - often via a paper check

In this process, Employee 1’s donation does not reach the charity for at least 45 days. Worse yet, many platforms have a minimum donation threshold, which means that the platform will not process the distribution until a minimum amount has been designated for the charity. This often means that a donor’s money can sit as a pending payment for months or even years, until additional donors make enough donations to reach the threshold.

The process gets even more convoluted when there’s a corporate donation match involved. That process looks like this:

  1. Let’s assume Employees 1 and 2 in the above scenario work for Acme Corporate, while Employee 3 works for XYZ Corp. Acme Corp and XYZ Corp both offer employee donation matches.
  2. Following their respective September donations, the legacy platform will send both Acme Corp and XYZ Corp an invoice for the match amount owed by each company, $25 and $25 respectively in this example. This invoice is sent in late October for September’s donations.
  3. Both companies receive and review the invoice. Reconciling the invoice takes 1-2 weeks.
  4. Upon approval, administrators at both companies forward the invoice to accounts payable for payment. Acme Corp has net-30 payment terms and sends the legacy platform $25 in late November. XYZ Corp has net-60 payment terms, so does not send its $25 until late December.
  5. The platform receives all funds in late December and processes payment of the matching donations to Charity X in January.

This example clearly lays out how an employee that made a donation on September 1st may not have her matching donation reach the charity for five months! This process erodes the employee experience, creates unnecessary administrative tasks for company administrators, and delays critical cash flow for nonprofits.

How has Groundswell upended this process to make distributions in 5 days?

Groundswell’s commitment to social impact drives everything we do. Thus, we set out to set a new standard in donation distribution timelines. The result is that we:

  • Instantly match an employee’s donation
  • Send both the employee’s donation and the company match together within 5 days
  • No longer aggregate these payments together, but instead send them individually

Now we have improved the employee experience, eliminated the administrative burden on companies, and improved the nonprofit’s cash flow.

But we’re not done. The only reason we’re waiting five days to distribute instead of sending the funds within 24 hours is because donors occasionally initiate credit card or ACH reversals, and it’s challenging to resolve these if we’ve already sent the funds to charity. However, we’re committed to examining the data over the coming months to determine what our reversal rate is, and whether we’re able to further reduce this timeline accordingly.

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